‘Shocking and Appalling’: The Gathering Storm as Communities Eye the Implications of PG&E’s Lack of Capacity in Southern Humboldt

The rippling effect of the PG&E load capacity issues in Southern Humboldt is continuing to reverberate throughout the county, with many not understanding the full effect this issue can have on our rural communities.

The Bombshell

Around a month ago, county officials requested a meeting with PG&E representatives to discuss ongoing delays in project connections throughout Southern Humboldt which includes the Eel River Valley. Many of those projects, fully permitted, built, and holding PG&E will-serve letters and down payment receipts, have sat awaiting connection to the power grid for up to two years.

The answers county officials were looking for revealed issues that can stifle economic growth in the affected areas and can potentially bankrupt developers that have invested up to a million dollars in development only to have their projects without the needed power to operate.

The PG&E reps informed county officials that the grid in Southern Humboldt is at maximum capacity and future connections to the grid will require upgrades that will cost close to a billion dollars and take ten years to complete. The county was blindsided.

Redwood Coast Energy Authority (RCEA) works collaboratively with PG&E, sourcing some of the energy that is then transmitted to customers through PG&E’s grid system. They also had no idea that the grid in the area was facing capacity issues. RCEA Executive Director, Matthew Marshall said that in hindsight there were some red flags, including the delayed connections to the grid for completed projects. However, he said, it wasn’t uncommon for connections to be delayed in the past, so those red flags went unnoticed. “It’s pretty implausible that they haven’t known this was a growing issue for quite some time, if not years,” Marshall said. He elaborated, “There’s required planning processes that they have to go to make sure that these things are known and planned for.”

Second District Supervisor, Michelle Bushnell said after hearing the shocking information, the Board’s goal was to inform the public as quickly as possible. Since then, the ramifications of PG&E’s announcement have been rippling throughout the county as residents, businesses, and entities begin understanding the complications of a maxed-out energy grid.

The Problem

Let us clarify, PG&E doesn’t make its money off selling us energy, a commodity that cannot be marked up to consumers. PG&E charges their customers for delivering energy through the company’s infrastructure. It behooves PG&E and their shareholders for the utility giant to continue upgrading and installing new infrastructure, thus increasing their profits. 

Marshall said, “[PG&E’s] financial incentive to the corporation is to do the work – it’s how they get the return for their investors. It’s shocking and doesn’t make sense that they would sort of punt this down the road for so long until it’s basically to the breaking point, apparently, and against their own financial self-interest.”

Many believe the issue in Southern Humboldt is caused by a lack of power generated, however that’s not true. There is power available, however, the transmission and distribution lines cannot carry the loads needed to supply power to additional projects in Southern Humboldt during peak use times. 

As Humboldt residents are not unfamiliar with aging road infrastructure, we’ll use that analogy, generously shared with us by Marshall. Energy, regardless from where it is sourced, is equivalent to cars. The transmission lines and distribution lines are akin to our highways and county roads. PG&E charges their customers toll to get their cars/energy from where they/it starts to their residence, ie, from work to home, only it’s a one-way trip.

The issue is that PG&E has not upgraded their roads, ie infrastructure, so now we have highways that are congested during rush hour as everyone is trying to get to their homes from 4 p.m. to 10 p.m. The highways are at capacity. Even some of the side roads, ie distribution lines, are at capacity as well. Too much energy trying to be delivered at the same time. We have plenty of energy/cars, but our roadways were not built to handle that much traffic at once safely.

This is why this issue is affecting a select region served by particular lines. Northern Humboldt is unaffected, not because it has the Humboldt power plant, but because their roads are large enough to accommodate all the traffic during rush hour.

Possible Solutions

This is also why it isn’t an easy or quick fix. Installing new transmission and distribution lines to the area along with upgrading the substations to handle the amount of energy coming into communities to service the distribution lines takes years of planning and PG&E is estimating a $900 million dollar price tag.

County officials have reached out to Senator Mike McGuire, Representative Jim Wood and the CPUC for help sorting out the situation. After speaking with the group, PG&E has asked for time to come up with solutions. Another meeting has been scheduled for November 1. Bushnell told us that she is willing to give PG&E the time asked for to come up with a viable solution before seeking recourse though she is anxious to have answers as soon as possible for her constituents.

Solar power has been suggested by some as a possible solution, though going back to the road analogy, having a solar powered car on a highway at rush hour is not going to stop the gridlock. However, having microgrids localized in areas without at-capacity distribution lines could utilize battery storage to power areas when the transmission lines are at their peak, keeping localized energy circulating on the clear side roads instead of pulling from the impacted highways.

Some of the distribution, ie side roads, are also impacted and at capacity though so microgrid energy would need to be localized in the communities that did not require passage on a distribution line that is at capacity.

To describe just one area’s situation: According to an online map on PG&E’s website, the line from Garberville to Redway and then going out to Shelter Cove is at capacity. Energy could not be generated in Garberville and shared to Redway. Even the resort town of Shelter Cove, which sources the community’s power through a wholesale supplier, is affected by the grid capacity issues as the purchased power is transmitted to the rural coastal town, in part, on PG&E lines that are said to be at capacity. However, Shelter Cove could potentially install a microgrid within the town and distribute the power on the grid within Shelter Cove itself.

In an email, PG&E spokesperson Deanna Contreras detailed some of PG&E’s plans: 

Our multi-year grid plan is addressing needs in this area through projects already in progress, and others planned over the next few years. These include a line reconductoring project and upgrades to the Rio Dell substation to increase capacity in Fortuna and Rio Dell; transmission and distribution system line reconductoring, and upgrades at the Garberville substation, to increase capacity for serving the Garberville area.

While some of this work is longer-term, in the short-term our capacity work planned through next year will support smaller energy load applications.

Marshall said that those possible solutions could be small fixes while PG&E upgrades their grid but ultimately, the grid has to be upgraded to allow growth regardless of whether the power is coming from renewable sources or not, the distribution method is the same.

Impacts

Several entities have been discussing the far-reaching impacts that this will have on the rural communities. As it stands, several development projects are already underway, some complete but without a connection to the grid. It remains uncertain what projects can be connected to the existing grid and which projects will stay in limbo.

At the September board meeting of the Garberville Sanitary District, board members had to address their discontinuation policy for water customers as a recent cannabis project had paid to install two water service connections at a cost of $8K a piece. According to the GSD, the project owner said he’s been informed that he will not be connected to the grid for 10 years, indefinitely delaying the project.

His options are to abandon the water meters with no monthly cost, or to pay a discontinuation fee of $500 per meter annually, resulting in a cost of $10K to keep his place on the water grid with no actual water service for the projected 10-year delay. The hefty price tag is still less than having to pay installation fees again resulting in an additional $16K in fees he’s already paid once, plus whatever raise in water connections the district sees in the next decade.

Additionally, the Weott Community Services District recently completed a water connection on a parcel that the property owner was planning on selling. Board members wondered if the resident would be able to get a PG&E drop to the property as planned prior to selling.

The Southern Humboldt Unified School District opted to continue seeking grant funding for electric school buses but cautioned that without PG&E providing an additional drop for the charging station, the grant funding would not merit purchasing a vehicle they were unable to charge.

In the city of Fortuna, a power wall installed to provide crucial backup power to a lift system for the city’s sewage system remains unconnected. Not only is the delay impacting the city’s efficiency during a power outage, but it is also jeopardizing the entire area’s ability to meet county and state requirements regarding renewable energy criteria.

Fortuna City Manager, Merritt Perry said, “The impacts are so large to the city. Right now, we have over 150 residential housing projects in progress, many of those are senior housing units. Desperately needed housing could come to a standstill.”

Perry listed a number of other projects that will likely be impacted by PG&E’s inability to provide connection to, including progress on development at the former mill site, renovations to the Fortuna Police Department facility, further development of the Strong’s Creek Plaza and Riverwalk areas. Perry is concerned that investors and potential business owners will opt out of development in Fortuna, taking their business elsewhere where the PG&E constraints are not an issue.

“I’m concerned that there was a failure to act. Why didn’t PG&E warn folks and how do we just walk right up to the edge of a cliff …and end up in this position where community facilities are being compromised, economic development projects are being compromised, residential housing projects are potentially compromised, critical infrastructure is being compromised?” Perry questioned. 

This comes at a time when the county needs to develop business sectors not reliant on the plummeting cannabis industry. Bushnell said, “We need to be able to rely on traditional economic growth, so that we can get something else coming into our county that will support us.”

Fortuna remains one of the only areas within the Southern Humboldt area that may have small pockets of capacity. Officials believe that projects already in process within those areas may be able to connect to the grid. The rest will have to wait for solutions from the very entity restricting the progress.

In Garberville, SoHum Health is in the planning stages for a new hospital on Sprowl Creek Road, a necessary relocation of the hospital from their existing site on Cedar Street due to earthquake requirements that the current building cannot meet. Initially, officials were told that there was zero capacity on the grid south of Fortuna, but then walked that statement back saying they would be able to service the new hospital only to use less definitive language a bit later.

Bushnell explained that in her conversation with PG&E reps, “They said they were unaware the hospital was being constructed and that, of course it was vital for the community, and they were looking at being able to possibly reroute some power from the Bridgeville area down to be able to service the hospital.” As much as Bushnell appreciates the willingness to work on a solution for the hospital, she is also concerned with other projects in the county whose future is uncertain due to the capacity issue. 

“It’s scary to think there’s already projects out there that have been waiting months and months, a year, …two years. Those folks have put [money], some up to a million dollars, into these projects, and if they don’t get some power, they’re going to [go] bankrupt,” Bushnell stated.

Additionally, the financial difficulties the utility giant has faced continue to be passed to their customers. PG&E has raised their rates four out of the last five years. Some PG&E customers have seen their bills double or even triple in recent months. In 2022, PG&E has raised their rates twice already, once in January, and again in March. They also have an application filed in 2021 with the CPUC for approval to increase rates and charges that, if passed, will be effective on January 1, 2023.

What’s Going on with PG&E

The PG&E corporation is not a stranger to conflict or issues. The utility that is the nation’s largest serves approximately 16 million customers throughout central and northern California. Energy customers are serviced through 125,000 miles of electric power lines. Those lines, many of which run through rural, forested, areas are aging and have been proven to be the source of ignition in several wildfires that have destroyed homes and resulted in the loss of life.

With dry conditions created by the ongoing drought, fires have continued to plague California leading to devastating wildfires every year. PG&E has been blamed for at least 30 of those wildfires since 2017, resulting in lawsuits and fines.

The Wall Street Journal reported that the corporation paid out $2.6 billion between 1996 to 2018 in lawsuit settlements and state and federal penalties which seems insubstantial compared to the estimated $13.5 billion settlement reach for the Camp Fire alone: the deadliest wildfire in California history taking the lives of 85 people in November 2018.

Following the devastating wildfires in 2017 and 2018, PG&E filed bankruptcy in 2019. The company emerged from Chapter 11 bankruptcy in January 2020 with $38 billion in liabilities and a promise to do better. The entity has restructured debts and agreed to pay $25.5 billion to fire victims.

The PG&E Fire Victim Trust, which was established to handle fire victim claims, consists of approximately 50% stocks and 50% cash. Currently, PG&E stock prices sit around $12.50 a share, around a third of what the stock was worth in 2017 prior to several deadly and devastating wildfires that were caused by electrical lines. Now the more than 80,000 fire victims with claims are concerned that the devalued stock will compromise their compensation.

To prevent or minimize future hefty payouts, and under the threat of SB 350, the Golden State Energy Act that could see the utility taken over by the state if found incompetent, PG&E has said it will upgrade its system, replacing faulty equipment and identifying fire risks. The company has begun using Public Safety Power Shutoff (PSPS) more during wind events and/or higher fire danger times, frustrating customers and officials who don’t see simply going dark as a sustainable solution.

PG&E has been implementing technological upgrades that can disrupt energy through lines that have been struck by a tree or branch, reducing the likelihood of fire. They have also ramped up their Enhanced Vegetation Management (EVM) work, clearing trees up to 200 feet from power lines. The EVM work has been met with criticism and protests, some private property owners refusing access to their property for what they say is ineffective clear cutting that they worry will cause more harm than good allowing ground fuels to thrive in full sun versus managing shaded fuel breaks.

Although vegetation management is a key component of power line safety, some feel that PG&E is focusing efforts there instead of on other, more costly upgrades, such as burying lines, that could more effectively hinder wildfire.

However, the utility is also insulating power lines, burying high risk lines underground, and swapping out flammable wooden poles for fire resistant and sturdier metal or concrete poles but at a slower than projected rate. High-tech solutions involving installing monitoring systems, quick disconnect technology and weather systems to monitor fire danger in specific areas are also in the works but come at a hefty price tag for a company coming out of a lawsuit. Critics say that the technology and upgrades have been available and utilized by other utility companies years ago but PG&E, they say, chose profit over safety.

Speaking with Marshall, Redwood Coast Energy Authority’s Executive Director, the failure to upgrade the grid in Southern Humboldt to allow expansion doesn’t seem to make financial sense. As developers lose money on projects unable to connect to the grid, so does PG&E. Although they save the cost of upgrading the system, to stifle development within the area also stifles their ability to deliver power; their shareholders’ profits are driven by infrastructure. Essentially, PG&E benefits from new connections, so why haven’t they upgraded the systems in Southern Humboldt?

Why weren’t we told before? 

County officials are saying that they can’t imagine a scenario where PG&E had not known about the capacity issues facing Southern Humboldt prior to the meeting in September. PG&E recently completed an analysis of their grid capacity, perhaps giving them more insight into what the grid capacity availability within Southern Humboldt is. However, one would surmise that PG&E has known the capacity capability of the Southern Humboldt infrastructure since its installation. As more projects came online, surely, PG&E has the estimated remaining capacity of those grids. PG&E monitors energy delivered to all of their 16 million customers, so it is a bit perplexing to understand how this capacity issue could have taken the company by surprise.

PG&E spokesperson, Deanna Contreras wrote, “As part of our Distribution Planning Process, we annually forecast load growth to assess needs on the electric distribution system and create plans and projects to address them. Similarly, the CAISO’s annual Transmission Planning Process forecasts load growth on the electric transmission system.” 

Contrary to PG&E’s planning process, according to Contreras, county officials were not told of any forecasted distribution issues until now, though representatives told county officials the capacity issues weren’t clear until a recent rate study was complete. Bushnell said, “The reason they said they couldn’t say for sure is they were doing a transmission line study that had just completed the few weeks before the meeting they had with us.”

Also indicative of their previous knowledge is the backlog of service connections that have sat for up to two years with no reason given for why those projects were not being connected to the grid. It was those unconnected projects that prompted county officials to request answers from PG&E.

A Fortuna City Staff Report written on September 19th summarized the information given to them by the utility company and summarized by staff. One bullet-point of information could potentially explain the timing of the capacity issue. “PG&E is not currently passing as much current through its transmission lines as it used to, to avoid the generation of heat and voltage issues that could lead to starting fires,” the report summarized. If the utility chose to lower the capacity of the grid in Southern Humboldt due to safety concerns, that would immediately create a capacity shortage that they had previously not foreseen.

Early in the conversation between PG&E representatives and county officials, legalized cannabis development in the region was alluded to as being the unexpected draw that has created the capacity issue. Currently, listed with the Department of Cannabis Control there are three small indoor cannabis cultivation permits, four specialty cottage indoor permits, and thirteen specialty indoor permits for a total of 20 legal indoor cannabis cultivation permits in all of Humboldt County out of 902 indoor cultivation permits active with the Department of Cannabis Control.

In years past, small illegal indoor cannabis operations were common in many households throughout the county serviced by PG&E. Looking at the current economic value of indoor cannabis, we’d surmise that there are less on-grid indoor cannabis operations today than five to ten years ago.

We asked PG&E spokesperson, Deanna Contreras what the area’s energy consumption was from 2017 compared to 2022. Contreras did not provide that information in her response email. However, without past energy consumption information, we cannot determine whether the capacity issue is due to an increase in energy consumption or if the utility has reduced its transmission volumes, potentially in a bid to reduce fire danger. 

In addition to time, PG&E has requested county officials provide them with a complete list of development projects awaiting connection, in progress, or in the planning stages so as to best determine what the energy demands will be and where. 

The question of why PG&E did not anticipate this capacity issue and more remain unanswered as the county gives the utility giant until November 1st to come up with solutions and hard data regarding the grid capacity issues that can cripple an area already facing economic hardships. 

One cannot emphasize enough the far-reaching impacts this capacity issue can potentially have if not managed and corrected as quickly as possible. As Marshall stated, “It’s frankly shocking and appalling and I don’t want to minimize it.”

An online distribution line capacity map is available through the PG&E website for customers with an online account. 

This article is written by Lisa Music, a local freelance journalist. To reach Lisa about tips, questions or comments, email her at [email protected]